Ethics & Public Policy Center

Remember ‘Reconciliation’? The GOP Can Move an Agenda without Democratic Support

Congressional Republicans are engaged in an important internal discussion over how best to use the arcane procedural mechanism known as “budget reconciliation.” Making the right decision about how to employ reconciliation could be the difference between a successful start to a conservative policy revival, or a lost year.

A budget-reconciliation bill is set in motion by the passage of a congressional budget resolution. This year’s budget passed both the House and Senate and calls for the use of reconciliation later in the year. However, the language in the resolution is vague enough to allow for a number of different legislative possibilities.

Budget reconciliation is a powerful tool because the Senate cannot filibuster bills with this designation, which means they can pass with a simple majority of 51 votes, instead of the usual 60. In practical terms, this means Republicans do not need Democratic support to send a reconciliation bill to the president.

Over the years, reconciliation has been used to pass many significant pieces of economic and budgetary legislation, including welfare reform in 1996 and President Bush’s tax cuts in 2001 and 2003.

Congressional Republicans are agreed that reconciliation should be available for a legislative response if the Supreme Court sides with the plaintiffs in the King v. Burwell case. Such a decision would puncture a large hole in the health-care law by invalidating insurance subsidies in 37 states. Although the ensuing disruption in insurance markets would be entirely the administration’s fault, Republicans are right to prep a serious legislative response that would help people who are losing subsidies and that also would move away from Obamacare’s heavy-handed strictures.

If, on the other hand, the Court sides with the administration in the King case, the GOP is split on what to do. Some would like to limit the use of reconciliation to full repeal of the ACA. That would be a mistake.

First, it is unlikely that Congress could repeal all of the ACA through reconciliation. Many provisions in the law are regulatory, not budgetary, in nature. The reconciliation process was amended in 1985 with the “Byrd Rule” to prevent senators from attaching non-budgetary items to a reconciliation bill. In practice, that means provisions of bills that have no budgetary effect, or budgetary effects that are “merely incidental” to the main purposes of the provisions, can be knocked out of a reconciliation bill with just 41 votes in the Senate. Some important provisions of the ACA are likely to fall into that category.

Second, repeal of the ACA without a replacement plan is terrible politics. Most Americans continue to oppose Obamacare, but that does not mean they are eager to return to the pre-Obamacare status quo. What they want is sensible reform to cut costs and broaden insurance enrollment without turning over the whole system to the federal government. Repeal without replace sends the signal that Republicans cannot agree on a plan to fix the problems in American health care. Even if Republicans were to successfully get such a bill to the president, he would find it very easy to veto it.

The eventual Republican nominee for president will need to propose a viable alternative to the ACA, which he or she could implement in 2017. During President Obama’s remaining time in office, Congress must satisfy itself with making some progress toward the ultimate goal of a better overall reform plan.

With that in mind, it would be far better to use reconciliation to pass an agenda that is both good policy and good politics, with provisions that roll back selected Obamacare policies and replace others with better reforms. A reconciliation bill should also include other important priorities on the Republican agenda beyond rolling back the ACA.

In health care, the GOP might target the Independent Payment Advisory Board (IPAB) — Obamacare’s unaccountable body of 15 technocrats charged with implementing spending cuts in Medicare without Congress’s approval. Many Democrats now realize what a terrible idea this was. If given the chance, they might just vote to kill it even if President Obama digs in his heels to defend it.

Similarly, Republicans could chip away at Obamacare’s requirements, by exempting more lower-income people from the individual mandate and more businesses from the employer mandate. These provisions are among the law’s least popular, so it is likely that some Democrats will join with Republicans in rolling them back. States should be given more flexibility to create alternate health-reform plans to provide coverage to their citizens outside of Obamacare’s strictures and without the need for approval from the bureaucrats in the Department of Health and Human Services. Written properly, all of these provisions could be included in a reconciliation bill and thus impossible for Senate minority leader Harry Reid to stop.

Beyond health care, Republicans could begin the next phase of welfare reform with stepped-up work requirements and more flexibility for states to design and run assistance programs. Comprehensive tax reform is not possible with the current president, but Republicans could advance targeted changes that dispense with some special-interest breaks and use the revenue to rationalize the tax treatment of profits earned abroad and to lower rates as much as possible. Or they could push for savings in Medicare with more competition, innovation, and choice instead of more regulation.

President Obama will oppose many of these ideas, but that should not dissuade Republicans from proceeding with a sensible agenda. Later this year, Republicans and Democrats will be forced to work together again to raise the debt limit and fund the government for fiscal year 2016. If Republicans spend their time this year advancing a realistic and appealing agenda through reconciliation, the party will be in a much stronger position to make demands during the inevitable negotiations that will occur with the president and his allies in Congress.

Reconciliation is a powerful tool that has been used many times over the years to pass important legislation. Republicans can make headway on their agenda if they quickly recognize that, this year, the tool will be most powerful if they use it to advance ideas that the president will be hard-pressed to veto, given that voters see them as sensible steps in the right direction.

— Lanhee J. Chen is the David and Diane Steffy Research Fellow at the Hoover Institution and director of domestic policy studies in the public-policy program at Stanford University. James C. Capretta is a senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute.